Case Study 2Case Study 2Medium-Size Steel Medium-Size Steel

ManufacturerManufacturerBy Tapiwanashe NhunduBy Tapiwanashe Nhundu

Company 2Company 2BackgroundBackground

Company 2 is a medium-size steel Company 2 is a medium-size steel manufacturer.manufacturer.

Original owner sold the company to an Original owner sold the company to an international steel corporation.international steel corporation.

4 Executives later purchased the 4 Executives later purchased the company in a leverage buyout.company in a leverage buyout. Committed to improving efficienciesCommitted to improving efficiencies Expanding the production of various customized Expanding the production of various customized

steel productssteel products Focusing on high-quality relationships and servicesFocusing on high-quality relationships and services

Company 2Company 2Customer/Distribution BaseCustomer/Distribution Base Company 2 sells to intermediariesCompany 2 sells to intermediaries

SuppliersSuppliers DistributorsDistributors Secondary Customer Base (contractors, Secondary Customer Base (contractors,

engineers, architects)engineers, architects) Company 2 has a limited distribution area.Company 2 has a limited distribution area.

Shipping to areas within the predefined Shipping to areas within the predefined geographical radius of the plant.geographical radius of the plant.

Shipping to areas outside the predefined Shipping to areas outside the predefined geographical radius becomes rather costly.geographical radius becomes rather costly.

Greatest competition for the mill are large Greatest competition for the mill are large steel manufacturers (domestic and steel manufacturers (domestic and international)international)

End

Use

rs

Company 2Company 2Supply ChainSupply Chain

Manufacturer - Producers

Pre-Casters Fabricators Distributors

Architects

Contractors

Department of

TransportationRepresentatives

Engineers

Inte

rmed

iarie

s

Company 2Company 2Challenges Challenges

Greatest competition for mini mills such as this Greatest competition for mini mills such as this one are large steel manufacturers (domestic and one are large steel manufacturers (domestic and international)international)

Despite record demand, prices/profits remained Despite record demand, prices/profits remained flat due to the influx of steel supply from foreign flat due to the influx of steel supply from foreign marketsmarkets

Immediate price rises eludes manufacturers’ Immediate price rises eludes manufacturers’ customers, therefore companies did either of the customers, therefore companies did either of the following:following:

Invested in new technologyInvested in new technology Consolidated with other (international Consolidated with other (international

manufacturersmanufacturers

Company 2Company 2Company ChallengesCompany Challenges

In 1998 after the Asian currency crisis there In 1998 after the Asian currency crisis there was an influx of Asian produced steel which was an influx of Asian produced steel which cause American prices to plummeted almost cause American prices to plummeted almost 34% lower than the prior year.34% lower than the prior year.

A legislation was passed prohibiting the A legislation was passed prohibiting the “dumping” of international inventory at “dumping” of international inventory at depressed prices was passeddepressed prices was passed

Dumping is when there is excess inventory, and Dumping is when there is excess inventory, and companies reduce their prices in order to get rid of companies reduce their prices in order to get rid of that inventory that inventory

Company 2Company 2Pricing ObjectivesPricing Objectives

3 Possibilities3 Possibilities Establishing and maintaining a predetermined Establishing and maintaining a predetermined

net return on salesnet return on sales Increase market shareIncrease market share Competing in prices with it’s primary Competing in prices with it’s primary

competitorscompetitors

Company 2 chose to increase market Company 2 chose to increase market shareshare

Company 2Company 2Demand AnalysisDemand Analysis

Estimated potential demand, Estimated potential demand, customers price sensitivity and customers price sensitivity and potential profit per customer potential profit per customer type/segmenttype/segment

A survey was conducted surveying A survey was conducted surveying direct customers and end users direct customers and end users

Company 2Company 2Customer Survey ResultsCustomer Survey Results

55%29%

16%

Product Quality

On Time Delivery

Local Service

Company 2Company 2Cost AnalysisCost Analysis

Prices were determined by the Prices were determined by the following factors:following factors: Customer SegmentCustomer Segment Quality NeedsQuality Needs Product Attributes (Based on the survey)Product Attributes (Based on the survey)

Company 2Company 2Cost Analysis….contdCost Analysis….contd

Companies would be now able to do Companies would be now able to do the following online:the following online: Track RebateTrack Rebate Order StatusOrder Status BillingBilling Quick and Reliable Technical SupportQuick and Reliable Technical Support

This was seen a long-term pricing This was seen a long-term pricing strategystrategy

Company 2Company 2Competitive AnalysisCompetitive Analysis

Maintain existing prices with financial Maintain existing prices with financial loyalty programsloyalty programs

Increasing level of services (social and Increasing level of services (social and structural ties)structural ties)

By providing rebates, benefits, and By providing rebates, benefits, and premiums to customers Company 2 premiums to customers Company 2 had an upper hand on competition as had an upper hand on competition as it would take competition a long time it would take competition a long time to implement this type of a system.to implement this type of a system.

Company 2Company 2Impact On Other ProductsImpact On Other Products

The new technology that company 2 The new technology that company 2 started using with relation to e-commerce started using with relation to e-commerce assisted in helping in production assisted in helping in production efficiencies.efficiencies.

Long-Term, company 2 expects that Long-Term, company 2 expects that customized sales will be generated from customized sales will be generated from the Web-site, and enhancements which the Web-site, and enhancements which would include technical libraries although would include technical libraries although they have not considered a future for they have not considered a future for selling these customized productsselling these customized products

Company 2Company 2Legal ConsiderationLegal Consideration

Secure Servers, User ID’s and Password would Secure Servers, User ID’s and Password would help tracking, monitoring, and accessibility of help tracking, monitoring, and accessibility of customer informationcustomer information

Robinson-Patman Act (Ritterskamp and Robinson-Patman Act (Ritterskamp and Hancock 1993) states:Hancock 1993) states: The Robinson-Patman Act of 1936 , or Anti-Price The Robinson-Patman Act of 1936 , or Anti-Price

Discrimination Act, (now codified as 15 U.S.C. § 13) Discrimination Act, (now codified as 15 U.S.C. § 13) outlawed the anticompetitive practice of producers allowing outlawed the anticompetitive practice of producers allowing chain stores to purchase goods at lower prices than other chain stores to purchase goods at lower prices than other retailers. retailers.

Therefore all policies and procedures are Therefore all policies and procedures are required to be well-documented to prevent required to be well-documented to prevent price discrimination.price discrimination.

All of the procedures would be developed, and All of the procedures would be developed, and monitored by the companies legal counsel.monitored by the companies legal counsel.

Company 2Company 2StakeholdersStakeholders

Due to the fact that it is a private Due to the fact that it is a private company investors were not a large company investors were not a large concern as they would have been if concern as they would have been if the company had been public. the company had been public.

Employers and Suppliers are the Employers and Suppliers are the companies main focus with plans on companies main focus with plans on different site dedicated to their different site dedicated to their needs.needs.

Company 2Company 2AttractingAttracting

Due to the size of the company and the predefined Due to the size of the company and the predefined trade area, the companies marketing budget is trade area, the companies marketing budget is minuteminute

Strong offline advertising such as advertising in Strong offline advertising such as advertising in trade journals (online marketing will be developed trade journals (online marketing will be developed later)later)

The companies website was incorporated onto all of The companies website was incorporated onto all of the companies existing technical information the companies existing technical information material.material.

Business Cards included the companies websiteBusiness Cards included the companies website Customer Relation building by providing new and Customer Relation building by providing new and

first time buyers are assigned a sales representative first time buyers are assigned a sales representative according to their geographical locationaccording to their geographical location

Company 2Company 2Attracting TechnologiesAttracting Technologies

Graphic were used by the designer for the Graphic were used by the designer for the lettering of the company name and quality lettering of the company name and quality logo.logo.

Antialiasing a technique used to reduce the Antialiasing a technique used to reduce the jaggedness on the edges by blurring was not jaggedness on the edges by blurring was not utilized by the designer. utilized by the designer.

The logo was blurred making the company The logo was blurred making the company look substandardlook substandard

Graphic link buttons were on a red Graphic link buttons were on a red background with white letters showing a background with white letters showing a goose bump like appearancegoose bump like appearance

Company 2Company 2EngagingEngaging

Main goal of the website was to provide Main goal of the website was to provide visitors with easy navigation through visitors with easy navigation through their websitetheir website

Sale should be made in three clicks or Sale should be made in three clicks or lessless

Visitor will be view the availability of Visitor will be view the availability of their desired purchasetheir desired purchase

At present the website has little At present the website has little engagement, and requires some engagement, and requires some improvementimprovement

Company 2Company 2Engaging TechnologiesEngaging Technologies

Libraries will be set up and will be available Libraries will be set up and will be available in a portable document format (PDF) filesin a portable document format (PDF) files

Conversion chartsConversion charts

What was missing?What was missing? Online calculator written in JavaScriptOnline calculator written in JavaScript

Portable document format (PDF) is an Adobe technology for Portable document format (PDF) is an Adobe technology for formatting documents so that they can be viewed and printed using formatting documents so that they can be viewed and printed using the Adobe Acrobat reader. the Adobe Acrobat reader.

Brochure-ware is a web site that is merely information placed on a Brochure-ware is a web site that is merely information placed on a page and is not commerce enabled. Similar to a brochure, these page and is not commerce enabled. Similar to a brochure, these sites are simply electronic marketing pieces with no ability to sites are simply electronic marketing pieces with no ability to perform transactions.perform transactions.

Company 2Company 2RetainingRetaining

Returning visitors were greeted by their Returning visitors were greeted by their name and a review of recent purchasesname and a review of recent purchases

Technical documentation would be specific Technical documentation would be specific to what the customer was engaged into what the customer was engaged in

Orders could be placed and tracked onlineOrders could be placed and tracked online Frequent customer reviews were made in Frequent customer reviews were made in

order for the company to operate order for the company to operate according to their customers needs.according to their customers needs.

Company 2Company 2Retain TechnologiesRetain Technologies

Potential customers were not Potential customers were not targeted for their potential return to targeted for their potential return to the websitethe website

No intuitive navigation was apparent No intuitive navigation was apparent on the site which thus stopped a on the site which thus stopped a number of potential customers from number of potential customers from returning to the sitereturning to the site

Company 2Company 2LearningLearning

Pop-up survey will be implemented to get Pop-up survey will be implemented to get constant customer reviewconstant customer review

Online behaviors will be monitoredOnline behaviors will be monitored Online and Offline purchase will be Online and Offline purchase will be

looked at in-depth to monitor the looked at in-depth to monitor the variations in product demand seasonally variations in product demand seasonally or geographicallyor geographically

Determine the difference in the Determine the difference in the purchasing styles of online, and offline purchasing styles of online, and offline customers for better marketing customers for better marketing strategies for each.strategies for each.

Company 2Company 2Learning TechnologiesLearning Technologies

Current site lacks forms and/or click Current site lacks forms and/or click stream technology.stream technology.

The current site relies on customers The current site relies on customers just sending in e-mails to someone just sending in e-mails to someone who will deal with the issue, rather who will deal with the issue, rather than having numerous e-mails that than having numerous e-mails that are specific to a department which is are specific to a department which is much more efficient.much more efficient.

Company 2Company 2RelatingRelating

Collection and analysis of online Collection and analysis of online surveys like the prior done survey for surveys like the prior done survey for demand analysisdemand analysis

Combining both online and offline Combining both online and offline customers in order to clearly customers in order to clearly understand both their customer basesunderstand both their customer bases

Personalized communication between Personalized communication between the company and it’s customers to the company and it’s customers to build strong relationshipsbuild strong relationships

Company 2Company 2Relating TechnologiesRelating Technologies

Only one link is available for Only one link is available for customer company communicationcustomer company communication

The building of a database that has The building of a database that has all of the customers information, and all of the customers information, and preferences so that no-matter who preferences so that no-matter who would be serving the customer, the would be serving the customer, the communication between them would communication between them would all be personal, and a connection all be personal, and a connection would be made.would be made.

Now What????Now What????

ANYANY

QUESTIONS????QUESTIONS????